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Liberty Eyes More DirecTV

7/13/2007 8:00 PM Eastern

Shares of DirecTV Group and Liberty Capital were on the upswing last Tuesday, after Citigroup analyst Jason Bazinet speculated Liberty could launch a $22 billion tender offer for the remaining shares of the satellite giant that it won’t get through a separate deal with News Corp.

Liberty in December agreed to swap its 19% voting stake in News Corp. for cash and that company’s 38.5% interest in DirecTV. That deal, valued at about $11 billion, is expected to close this year.

Bazinet said Liberty wants to own 100% of DirecTV and consolidate all of the satellite company’s cash flow. He estimated that Liberty could launch a $30 per share tender offer for the remaining 61.5% of DirecTV, perhaps by creating yet another tracking stock for the deal. He also believes that $30 per share tender offer (a 23% premium to DirecTV’s July 9 close of $24.39 per share) could happen within the next 12 months.

Liberty spokesman John Orr declined to comment on the Bazinet report specifically, but said that issuing new tracking stocks is not out of the question for the company. DirecTV spokesman Robert Mercer declined comment.

100% Stock 50% Stock 0% Stock
0% Cash 50% Cash 100% Cash
Source: Citigroup research
Offer Price $30 $30 $30
No. of Shares 731 mil 731 mil 731 mil
Tender value $21.93 bil $21.93 bil $21.93 bil
Cost to Liberty -- $2.193 bil $4.386 bil

September